Industrial Symbiosis in Sweden

Industrial Symbiosis in Avesta

The industrial symbiosis network in Avesta revolvles primarily around heating energy integration among region's key activities and clearly demonstrates the environmental and business benefits of symbiotic relations, as well as their contribution to innovation.

Overview of the Region and the Network

The Avesta region has a long history of being a mill town due to its closeness to valuable natural resources as the Dalälv River and various mines. In the early 14th century the region began its manufacturing of steel but in the 17th century it changed to copper and the local mint were for nearly 200 years the major manufacturer of coins in Sweden. When the mint migrated from the town in the 19th century because of a fire devastating a major part of the town, the era of coin production ended. Only a few decades later new industrial activities emerged, this time refocusing on steel manufacturing which the town once had a history of producing. The production of steel continues even today but the region also possesses other industries, which includes one sawmill and one paper mill.

Taday an industrial symbiosis network is operational in Avesta, where Värmevärden AB, Outokumpu AB and AB Karl Hedin AB, Avesta municipality, Harsco and AGA Gas AB are a part. The key actors or the network and their relationships are graphically depicted in figure below.

Key Actors

Information about the main members of the symbiotic network is given below.

Avesta region

Number of inhabitants: 22 300.
The Avesta municipality and region, includes around 22 300 inhabitants. The household waste generated in the region is collected and supplied to Källhagsverket power plant as fuel.

Värmevärden AB

Värmevärden AB is an energy company that delivers district heating to residences and industries. The company operates in ten municipalities in mid-Sweden. They often combine their district heating business with cooperation between themselves and local industries. For example, they investigate the potential of excess heat from the industries and then approach the industry with ideas for synergies, which have the potential of being profitable for both actors.

Värmevärden AB currently owns the district heating network and the power plant Källhagsverket in Avesta. In 2014, 235 GWh of heat were delivered to the district heating network, whereof 200 GWh were produced in Källhagsverket. The proportion of heat sources can be studied in Figure 1. The waste boiler together with the heat pump produce 74% and the biomass boiler 9% of the 235 GWh. Excess heat from Outokumpu AB equals 11 % and the heat from AB Karl Hedin 2%. Remaining 4% are being produced in the two oil boilers.

Figure: Breakdown of heat supply to districtt heating network

Källhagsverket classifies as a heat plant because of the fact that it only produces heat. Värmevärden AB have chosen to focus on district heating as well as investigate and implement synergies in excess heating. Värmevärden AB has investigated the possibilities to rebuild a boiler for electricity production in Källhagsverket but the main reason for not rebuilding the plant to a combined heat and power plant is the economical aspect. Källhagsverket currently has no turbine and the boiler has a low steam data for avoiding high temperature corrosion, which results in that the realization of power generation requires large investments in order to be possible.

Värmevärden AB defines their own role in synergies as a system coordinator and initiator as well as being an anchor in the synergies they are a part of in Sweden. They approach industries with solutions concerning potential synergies and try to make the proposals profitable for each actor. Värmevärden AB mention that this business model of finding and maintaining synergies has made them efficient and experienced in the area, which makes them an actor with wide knowledge when it comes to industrial symbiosis.

AB Karl Hedin

AB Karl Hedin is a family owned sawmill and trading group with operations in mid-Sweden and the Baltic countries. The whole company is one of Sweden’s largest privately owned sawmill groups. The business model is to deliver high-quality wood mainly for construction and packaging. In Krylbo outside Avesta, AB Karl Hedin owns the sawmill which saws and planes wood.

Outokumpu

Outokumpu AB is a global leader in stainless steel with a cold-rolling capacity of 2.6 million tons. Outokumpu AB’s largest production facility in Sweden is located in Avesta and it is the only stainless steel foundry in Sweden. The material inputs to Outokumpu AB are mainly recycled steel because of the fact that it is 100% recyclable.

Outokumpu AB’s main residues consist of hydroxide sludge, flue dust and iron sludge. The residues are mainly being recycled back into the process, dumped at landfills or transported to companies that buys residues and then sells them as resources to other companies.

Another synergy connected to Outokumpu AB is with the gas company AGA Gas AB who today owns an air-gas factory at Outokumpu AB’s production site. The factory produces, stores and distributes oxygen, nitrogen and argon to Outokumpu AB. The heat for the production of the gas derives from district heating. During Outokumpu AB’s production hours the factory has to produce gas constantly, otherwise Outokumpu AB’s production will stop.

Stora Enso AB

Stora Enso Fors AB is one of the world’s largest and most modern producers of paperboard for consumer packaging and printed matter.

Their main inputs are biomass, chemical pulp and chemicals. Their main waste outputs are bark, sludge and ash. Today AB Karl Hedin sell their wood residues to the company Agroenergi Neova Pellet in Norberg for pellet production. The pellet are then delivered to Stora Enso Fors AB for incineration in some of their boilers, primarily the pellet boiler.

Stora Enso Fors AB has never been included in the heating synergies in the Avesta region. They mention that they have never seen any potential in being a part of the synergies, even if they have a lot of excess heat from their production, which currently is being unused. They mention that buying district heating would be hard to implement for a technical reason, because the district heating temperature is too cool to use in their production processes. They also argue that the district heating demand has stagnated in Avesta, which makes their contribution of excess heat to the district heating network unnecessary. Another relevant problem is the fact that the village Fors is located around 10 kilometers from Avesta and if the district heating scenario should be realized the necessary pipelines will require major investments.

The Industrial Symbiosis Network

The foundation of today’s main synergy network consists of the stainless steel manufacturer Outokumpu AB, the sawmill AB Karl Hedin and the energy company Värmevärden AB delivering district heating.

The first synergy began in 1996 between Avesta Sheffield AB (today Outokumpu AB) and Avesta Energi AB (today Värmevärden AB) who then owned the district heating network in the Avesta region, including the power plant Källhagsverket. The synergy consisted of transferring heat between each other. Avesta Sheffield AB would sell excess heat to the district heating network certain times and Avesta Energi AB would sell district heating to Avesta Sheffield AB during certain times. A few years later AB Fortum bought the district heating network including the power plant from Avesta Energi AB and became the local district heating distributor, but the synergy remained unchanged.

In the year of 2008 AB Fortum approached the sawmill AB Karl Hedin which is located in Krylbo, a few kilometers outside Avesta. Their idea was to replace some of AB Karl Hedin’s heating needed for wood drying with district heating. Instead of AB Karl Hedin using their biomass boiler for drying all year around, AB Fortum would deliver district heating during the summer months. During the winter months, AB Karl Hedin would combine their biomass boiler with district heating for the wood drying process. They would also deliver heat from their biomass boiler during certain times in the winter. During a few weeks in the summer, AB Karl Hedin would deliver district heating when Källhagsverket would be cut off due to maintenance. As a part of the cooperation, AB Karl Hedin would also sell sawdust to AB Fortum for incineration in Källhagsverket. One year later, in 2009, the ideas were realized and the synergy that still exist today began. AB Karl Hedin became the first actor in Sweden drying their wood with district heating.

In 2011, the situation changed when AB Fortum decided to focus their finances towards the Stockholm region. They made the decision to sell several of their district heating networks and power plants in Sweden, including the one in Avesta. Out of this grew the company Värmevärden AB, owned by an Australian venture capitalist and a Canadian pension fund. The new company bought the district heating network including the power plant in Avesta. The employees at Värmevärden AB originated from AB Fortum, which resulted in the local workforce remaining intact as well as the synergies.

Benefits and Drivers

The benefits gained with a concept such as industrial symbiosis vary and depend on various successful factors. A question raised was, “What benefits should be expected through industrial relationships?” The study contributes by letting the actors reflect over this vital outcome and to give answers from their experience. An interesting reflection was that the perceived benefits gained vary with the involvement or role played in the network along with the knowledge and longer experience with operating synergies. Expected benefits can be reduced costs, improved environmental performance within the network, improved efficiency performance, innovations and knowledge upgrade, all contributing to business competitiveness.

One of the actors gives a more direct answer in the benefits being founded on economics only. Another actor also identifies the reduction of costs as the most important benefit and connects the savings to reduced fuel-use as well as to the avoidance of costs associated with maintenance, control and inspections of boilers for example. They underline that economy and environment goes hand in hand and the importance of realizing the expressed equation. The third actor mediates a wider reflection over the drivers and benefits associated with the work. They express a wider range of comprehension and appreciation of the drivers’ significance, possibly liked to their connection to the company’s core business and quite unique business model.

More efficient use of capital is an important driver with the motivation that micro management would be more costly than macro management. If everyone would only support and live their own life, in terms of energy e.g., rather than large-scale management the impact would increase. In most cases more efficient operation equals less human resources. System optimization is often a main driver for many actors even if not always directly connected to concepts such as industrial symbiosis. Optimized production, distribution and use of energy relate to electricity as well as to heating and cooling. Värmevärden AB regards the improved environmental performance as a distinguished benefit. The chances of every actor using a boiler independent of type of fuel, also accounting for best available gas treatment and flue gas system are considered slim. It is not business efficient to over-invest in every process. We are in agreement that the environmental performance measured in Green House Gas-emissions would improve with better technique. However, the environmental profile is heavily dependent on incinerated material - an aspect that should not be underestimated nor diminished. A biomass boiler can have a better environmental profile without the techniques mentioned compared with a boiler running partly or entirely on fossil fuels. Improved resource management leads to efficient management of primary energy by utilizing the industrial excess heat instead of cooling or flaring the unwanted additional heat. Lower system costs are an easy-to-measure benefit making it a preferable driver. Last, environmental regulations may induce companies to make better use of their energy use.

Only focusing on the economical benefits of industrial symbiosis, not valuating and including aspects such as more reliable supplies, better resource management or enhanced competitiveness for example, will reduce the potentials as well as the incentives and shade the goals.

Drivers or benefits associated with industrial symbiosis are mostly performance related. Widely studied are economic and environmental benefits from perspectives of materials exchange or engineering but from social perspectives research fall short. Social perspectives are more abstract and finding a link between such perspectives and economics or environmental indicators make a complicated model. In the Avesta case the synergies result in a conservation of heat standard in the region with improved resource efficiency. Valuating this benefit in relation to economic and environmental indicators is a difficult task.

A key for success we see lay in letting all parties benefit and gain from the synergies. Not on a millimeters justice level, but ensuring a win-win moral, making sure all parties are satisfied, we feel is vital for successful symbiotic relationships. We would go so far as saying that collective benefits are a necessity. How well firms succeed in creating collective value will form a building rock in the assessment of industrial symbiosis outcomes.

Identified roles in the operating synergies

The roles of particular actors in an industrial symbiosis network have often been a central matter for analysis. How the actors consider their own role in the operating synergies and the significance of other actors’ roles, were questions approached in the study.

The role played by AB Karl Hedin is in the categorization of “the helping hand”. Värmevärden AB needs to have continuous operations incinerating waste all year around. During the warmer period the demand for district heating is markedly decreased and the produced heat flared without utilization. Distributing heat to AB Karl Hedin during seven months makes the cooperation profitable for both parties. Although AB Karl Hedin was approached by AB Fortum in 2008, not initiating the synergy, they now feel as if the division between who is the most driving actor is 50/50. AB Karl Hedin specifically expressed appreciation for Värmevärden AB’s expertise and skills especially during the planning stage.

Outokumpu AB described a comprehensive will to work and evolve the collaboration with Värmevärden AB. They too recognized the importance of Värmevärden AB’s role in providing specific expertise to increase the feasibility. The division is seen as 60/40, Värmevärden AB being the somewhat more powered actor. Operations must occur in tune with Värmevärden AB. A specific example being that Outokumpu AB are not able to distribute more excess heat into the district heating network when they experience abundance. Outokumpu AB submits the fact that a lot more excess heat is available but mean that Värmevärden AB does not have the demand at the moment.

An interesting item detected is the unique contract and operational balance between Värmevärden AB and Outokumpu AB making the synergy work. The contract makes space for daily or weekly changes in the heat flows. The unique way of handling the changes and optimizing the synergy by balancing the flows is more administrative demanding but we can identify an important outcome: the prevention of lock-in situations in the network. Making the parties less dependent on waste and heat flows from existing processes, preventing loops of old technologies, systemic power imbalance and resource inefficiency. The specially designed contract make it possible for Outokumpu AB to in parallel work with making processes more efficient, being more energy efficient and to make use of the excess heat internally. Outokumpu AB has their own district heating network with their own excess heat flows covering the demand for processes in need of heat. They cool some processes in their walking beam furnaces by internal district heating. Outokumpu AB has a goal to become self-sufficient and the goal doesn’t contradict the common vision or goals within the industrial symbiosis relationships.

A unique collaborative contract also exists between Värmevärden AB and AB Karl Hedin where Värmevärden AB acts as a system coordinator controlling the operations by optimizing the use of units. Värmevärden AB monitors the system and balances it by requesting alterations, e.g. asking AB Karl Hedin to instantaneously reduce the effect of their boiler.

Värmevärden AB is the heart of the network, an anchor, supplying and distributing heat to the area. Actors in an industrial symbiosis casted as the anchor play a meaningful coordination role for the entire system. They may function as a connecting hub and generate awareness. Värmevärden AB is acting as a catalyst, system coordinator and initiator, but also partly as a “knowledge bank”. They consider themselves as having the experience, knowledge, expertise and the ability to help with technical investigations. If and when a potential synergy is realized Värmevärden AB investigates the potential further by studying the feasibility aspects, especially technically, by carrying out an investigation and presenting the results. In many cases the results are negative lowering the feasibility, resulting in otiose work. Värmevärden AB has a figurative view of their role in the operating synergies in contrast to the other actors. They see themselves as sitting in the driver's seat and the industries are back in the trunk, not even in the back seat. The industries are absolutely in for the ride, just not wholeheartedly. Värmevärden AB also answers that contractual there is no indicators of Värmevärden AB having bigger influence but the cooperation relate to Värmevärden AB’s core business making it an obvious driver.

The roles of industrial symbiosis can be further studied and the authors are confident this study contributes, if yet of minor proportions. An aspect of interest for further research, that the authors did not study, is how powerful actors guide towards strategic vision and shape a common identity in networks.

Private actors

An interesting point in the case of Avesta and its operating synergies is that all three actors have private ownerships. Private companies are usually primarily occupied with their core business and core processes. Less or no focus is laid on networking and creativeness linked to improved environmental performance. The driving factor is often economically impregnated and private interests valued the highest. Although private companies are in control of resources and waste flows, it is not a prioritized matter in the boardroom. Findings in Avesta reveal the economic gain as the main incentive to create or enter a potential synergy. A more familiar work area for improvement is related to energy efficiency. The familiarity with energy work may come from it being indirect connected to the core processes - less input - same output equal higher yield. The main observation of the three actors in Avesta is that money saving, short or long term, form the main prerequisite for engagement over business boarders. The investment needs to pay off.

When the first initiative was made to collaborate, 20 years ago, between Avesta Energi AB and Outokumpu AB it was a Private Public Partnership, PPP. Initially the importance of Avesta Energi AB being municipally owned played a big role for Outokumpu AB. From their viewpoint, the decision to commit and to form a written agreement was considered safer and the decision was also facilitated by the minimized risk of Avesta Energi AB emigrating. The collaboration was realized by the fact that Avesta Energi AB needed additional output and Outokumpu AB had access to unused excess heat. In the emerging phase, it may have been more of an environmental improvement project initiated partly by pressure from the authority. The contract evolved into requirements on delivered excess heat to Avesta Energi AB but also into covering the district heating demand to Outokumpu AB. The structural ownership and shape switched three years later from Avesta Energi AB into AB Fortum but had no experienced effect since the contracts already were designed and operational.

Future plans

Based on this study the authors have identified a few potential areas for development of the industrial symbiosis network in the future. First of all, Outokumpu AB mentioned that they have great potential of delivering additional excess heat to the district heating network. Although, they indicate that Värmevärden AB has no need for more heat today. Therefore, Outokumpu AB sees a potential in delivering more heat to the district heating network if Värmevärden AB expand their customer base to a larger heat demand. The problem for development of this synergy is described to be in the market and the demand, not the supply. The same problem is revealed in connection to the synergy between AB Karl Hedin and Värmevärden AB. AB Karl Hedin estimate that they have the potential to deliver almost ten times more sawdust to Värmevärden AB, but today no demand exists. The main essence of this is that in order to make the most out of the existing energy and material resources, a larger market or new solutions are needed. Investigating if the surplus can meet a deficit in the region, even between industries, like an example catalyzed by Värmevärden AB between Stora Enso Fors AB and Billerud in Grums. With additional excess heat, making sure it is a reliable supply and available at useful hours, Värmevärden AB could decrease the waste or biomass incineration exchanging it with excess heat, making use of an unused source. If the supply is large enough we state that there should be incentives to exchange a part of the baseload in the district heating network. The case of incineration to obtain heat is not a black and white question solved by one solution. It is rather a large grey area with diffuse options dependent on the perspective applied. With this in mind it is difficult to conclude if exchanging waste with biomass or excess heat would actually be an improvement depending on other waste management options.

According to Värmevärden AB there have been discussions about creating a synergy with Stora Enso Fors AB but the persons interviewed at Stora Enso Fors AB were not aware of this discussion. Värmevärden AB investigated the possibility of taking care of Stora Enso Fors AB’s excess heat some years ago. The distance between the actors is mentioned as a hinder by Stora Enso Fors AB but Värmevärden AB means that it is technically possible, it is rather a question of investment. Värmevärden AB also believes that there is a possibility to use district heating in Stora Enso Fors AB’s production processes, today dried with steam at the pressure of 5.5 or 12 bars, which Stora Enso Fors AB themselves do not agree with. Stora Enso Fors AB also state that the demand for heat in the Avesta region is already fulfilled and therefore there is no market for Stora Enso Fors AB’s excess heat. We believe that there is potential for connecting these two actors since they have energy flows that are of interest for each other. Although, a more thorough study is needed to deeply look into technical and financial parts of such a synergy.

Stora Enso Fors AB buys pellet to pulverize and use in one of their boilers converted from oil into dried powder, being the largest power boiler operating at maximum 63 MW. The pellet input used by Stora Enso Fors AB comes from the region, either from Norberg or Horndal. At the facility in Norberg sawdust from AB Karl Hedin mainly functions as the input for producing the pellet by a biomass boiler. Värmevärden AB investigated, some seven years ago, the possibilities of making big structural changes connecting Stora Enso Fors AB to the operating synergy network. The idea was to dry AB Karl Hedin's sawdust with optimized heat, meaning a drying process by district heating, and resulting in improved primary resource management. The facility was to be built in Avesta, connected to the district heating grid, drying the sawdust and finally pulverizing the product for use in Stora Enso Fors AB's converted dried powder pellet boiler. The project would have to include a long-term fuel contract between Värmevärden AB and Stora Enso Fors AB to insure future operational stability. The concept was presented to Stora Enso Fors AB but never realized due to investment barriers.

The authors see a future potential of the organic sludge produced at Stora Enso Fors AB being digested among with the organic waste sorted by the Avesta municipality in a digestion facility built in proximity to the region. Stora Enso Fors AB has explored the possibility of building a digestion facility on site but not found the economic driver making such a project feasible.
We highlight the potentials for expansion of knowledge sharing and innovation stimulation.